State Issues Warning Letter to Allied Boston Banking to Cease and Desist from Conducting Banking Business in California – Superior Court Issues Preliminary Injunction

Jan 26, 2001

SAN FRANCISCO – The Department of Financial Institutions learned that “Allied Boston Bank” (“Allied”), an off-shore bank licensed by the Republic of Palau, might be engaged in the banking business at offices located in San Francisco. On June 23, 2000, the Department issued a warning letter to Allied, and its Executive Vice President, Jack Grover, to cease and desist from conducting banking business in California without authorization. A warning to bankers regarding Allied was also placed in the Department’s June Monthly Bulletin to the state’s financial institutions.

“We will continue to do everything in our power to insure the safety and soundness of the banking industry in California,” said California Commissioner Donald R. Meyer.

After further investigation, the matter was referred to the California Attorney General. The Department filed suit in San Francisco Superior Court on October 3, 2000, for violations of Financial Code Sections 3390, 3391, 3392, 1725 and 1750; On October 6, 2000, the Superior Court issued a temporary restraining order prohibiting Allied from engaging in the banking business, operating a representative office, agency or branch, and from using the word “bank” in its name without authorization from the State Commissioner. After argument at an Order to Show Cause hearing, on November 28, 2000, the Superior Court issued the preliminary injunction.

The Department of Financial Institutions is responsible for regulating the State’s laws relating to state-licensed banks, state-licensed savings and loans, trust companies, state-licensed offices of foreign banks, issuers of travelers checks and payment instruments (money orders), transmitters of money abroad, state-licensed credit unions, and state-licensed industrial banks. The department reports to Secretary Maria Contreras-Sweet of the Business, Transportation and Housing Agency and Governor Gray Davis.